As is the pattern in a data dependent world, the US CPI will now take center stage as the market watched the sideshows after the last key event, the US employment report last Friday which was deemed a "goldilocks" release for the US/markets.
Heading into the CPI data at 8:30 AM report (headline 0.0% est with the core at 0.3% est. and YoY at 5.7% headline and 6.5% core), most of the major currency pairs are up and down steady. The exception is the JPY which is the runaway strongest of the majors (from the start of the new trading day too), with moves of over 1.25% vs all of the major currencies on BOJ speculation (the central bank meets next week).
Recall, the BOJ surprised in December by raising the targeted 10 year yield ceiling to 0.50% from 0.25%. The hope is there is more surprises when the central bank meets next week. For a great overview see Justin's post HERE.
Technically, the USDJPY fell below its 200 hour MA in early Asian trading and after a retest of the key MA bias defining level in the early European session, the sellers leaned and pushed lower in the European morning session. The price is down testing the swing low from December at 130.556. A continuation move below that level and below the August 2, 2022 low at 130.38, would have traders looking back toward the lows from the first trading day of the year down at 129.498.
Looking at the strongest to the weakest, the JPY is the only currency, whose cumulative changes vs the majors on the day are positive. The rest of the major currencies are negative. The GBP is -0.31% cumulative decline vs the majors while the NZD is the weakest of the majors with a cumulative decline vs the majors for -3.51%. The USD is lower but with gains vs the CHF and NZD to start the day, with a big decline vs the JPY and unchanged vs the EUR, GBP, CAD, and AUD as it awaits the next shove (either higher or lower) after the CPI data.
US stocks are modestly higher in premarket. The Nasdaq is working on a 4 day win streak. The US yields are lower as is looks for something good today. The US treasury will auction of 30 year bonds at 1 PM. The 3 and 10 year notes were met with strong demand especially from overseas investors on Tuesday and Wednesday.
In addition to the CPI, the US will release the weekly unemployment claims at 8:30 AM with expectations for 215K vs. 204K last week.
In other markets:
- Spot gold is resuming its run to the upside with a gain of $13.75 or 0.75% at $1889
- spot silver is up $0.33 or 1.47% $23.74
- WTI crude oil is trading up $1.08 $78.49
- Bitcoin is trading higher at $18,283
In the premarket for US stocks are trading higher. The NASDAQ index is looking to string its 5th day in a row higher with a gain today.
- Dow Industrial Average is up 102 points after yesterday's 268.91 point rise
- S&P index is up 12 points after yesterday's 50.34 point rise
- NASDAQ index is up 29 points after yesterday's 189.04 point rise
In the European equity markets, the major indices are also trading higher:
- German DAX, +0.73%
- France's CAC was 0.95%
- UK's FTSE 100 +0.75%
- Spain's Ibex +0.92%
- Italy's FTSE MIB +0.62%
in the Asian-Pacific markets, the major indices were mixed
- Japan's Nikkei index +0.01%
- Hang Seng index up +0.36%
- New Zealand's 50 index +0.24%
- Australia's S&P/ASX index +1.18%
- Shanghai composite index 0.05%
In the US debt market, yields are lower ahead of the CPI. The US treasury will auction off 30 year bonds at 1 PM ET.
- 2 year 4.213%, -1.4 bps
- 5 year 3.632%, -3.8 bps
- 10 year 3.506%, -5.0 bps
- 30 year 3.633%, -4.6 bps
European benchmark 10 year yields are also trading markedly lower with the UK 10 year down -9.3 basis points on the day:
